The Three Ways Forward For Microsoft And The Xbox One

Paul Tassi
, ContributorNews and opinion about video games, technology and the internetOpinions expressed by Forbes Contributors are their own.

My colleague Mark Rogowsky recently published a piece that contained a rather worrying chart, which showed the growing disparity between PS4 and Xbox One sales. Though the gap was a million consoles a few months ago in favor of
Sony, now the gulf has widened, with
Microsoft more or less refusing to publish actual sales, giving only a units shipped number that forces everyone to compare apples to oranges.

Sony is bursting with pride, announcing that 7 million PS4s have been sold to consumers, while Microsoft seems reluctant to admit that "just" 5 million Xbox One have been shipped to stores, which means total sales are even lower. As seen by the chart, the gulf is widening, and the fact that Microsoft is destroying 360 sales at the same point in time doesn't seem to matter.

So, what to do?

I don't think there's really a steep quality gap between these two systems, both performance and game catalog-wise. At least not right now. In my eyes Microsoft actually has the more attractive collection of exclusives by a nose, and these much-talked-about power disparities are not noticeable to the average consumer most of the time. PSN vs. Xbox Live is another area of contention, but the two services are more similar now than they've ever been (though Microsoft still has work to do with apps locked behind Gold's paywall).

Rather, the problem would seem to come down to one thing only, price. If the two systems are close to identical in so many ways, it seems silly that one costs $100 more, and obviously its competitor would outsell it. The main reason for the price gap is Microsoft's Kinect, a device that has some fans, but more critics, and in my eyes, has not proved itself worthy of bundling and the subsequent price increase that comes with it.

The way I see it, Microsoft has three options going forward, because one way or another, a price cut has to be in their future.

1. Cut Kinect

Even if this one is the most logical, it also seems the most unlikely. Microsoft is more or less "pot committed" to the Kinect at this point, and they don't want to give up the dream that the device can change gaming and living room entertainment. Unfortunately, a gesture/voice system that works even 80-90% of the time is still frustrating to use, and it's hard for many Xbox One owners (or potential owners) to see the $100 value out of it. It's a sort of thuggish way to try to force your product on someone, by bundling it with something people know they want. The idea was that "if only people could just try Kinect, they'd love it!" But I don't think that's happened in the majority of cases.

Kinect could come full circle however, if Microsoft decides to get in the VR game. I've seen many, many VR prototypes, the Oculus Rift included, use a Kinect as a way to track body position while using VR. If Microsoft either partnered with Oculus or debuted their own system, Kinect could prove useful again. But considering there hasn't been even a whiff of that, it could be a long time off.

2. Cut the Disc Drive

This is an idea breathed to life via a collection of a rumors that said Microsoft is planning on releasing a disc-less, cheaper version of the Xbox One as soon as this fall. Cutting the disc drive would be a way to save costs on the machine while still retaining Kinect, and could drive the price down $50 to $100. The idea would be that with a (hopefully) bigger hard drive, players could just download all their games. The result would be a cheaper console for Microsoft, and a larger software revenue stream by cutting out Gamestop.

Even though this may end up happening, and seems more likely than them cutting Kinect, I can't help but feel it would be misguided on Microsoft's part. The idea that they would get rid of a disc drive, which is leagues beyond what people were already vehemently complaining about at last year's E3, while keeping the Kinect, something far less popular, does not seem like the right path to go down. While I personally wouldn't mind, as I download most of my games as-is, there is a huge contingent of used games folk out there who would rebel against the idea. I guess it could work as an optional version of the console, but then that wouldn't completely solve the price issue. Which leads to the third option:

3. Just Cut the Price

A price cut is coming, somehow. Maybe Microsoft won't want to lose any functionality of the One at all, be it the Kinect or the disc drive, and so they'll just agree to cut the price and "deal with it," to quote an ancient Xbox meme.

This is generally how things works normally. A console has been out long enough where the price can start to be cut naturally, as it can be made for cheaper. I can't imagine Microsoft would go all the way to a full $100 price cut doing this. They'd probably stop at around $50 so they wouldn't have to eat a huge loss, though that would still put them outside the range of the PS4. And that's if Sony doesn't undercut them two years in a row by announcing their own price cut (though with how well the system is selling, there's no reason for that). To me, this may be the most likely solution of all, though without knowing more about Microsoft's manufacturing costs and margins, I can't say for sure.